This question of a marketing budget is inevitable when talking to a potential client. Many times a business will come to me with a need for marketing and they are not sure what kind of campaign they need, or how much they can afford to spend. They will tell me about their slow growth in the marketplace. About how they’ve tried to market with different scenarios and each one seems to come up short.
Sometimes the question of their budget comes as a surprise to them, and they will reply with wanting to know our prices on certain marketing services. However, my friends, marketing services don’t come in a one-size-fits-all package. There are all types of horse businesses in different parts of their growth journey. Therefore, each should allocate a different predetermined percentage toward their marketing or growth.
4 Factors of a Marketing Budget
There are a few different factors that go into setting a marketing budget.
- It’s important to note that B2C companies historically tend to spend more on their marketing in services and product sectors than B2B companies. B2C is a term that means your Business serves Consumers. B2B is a term that means your Business serves other Businesses in its commercial transactions.
- Where your business is, in regard to its growth stage is another factor.
- For example, it’s recommended by SBA.gov that startup companies invest 12%-20% of their estimated or annual revenue toward marketing.
- For companies that are mid-growth, and have a healthy margin of at least a 10-12%, an average marketing budget for B2c and B2b was 11% last year
3.The industry that you’re in will factor into the amount of marketing you allocate. The education industry tends to spend the most on marketing according to the 2018 CMO survey, while the healthcare industry on average spent 9% on their marketing in 2018.
4.The 4th factor is your business size. A smaller company with 1 or 2 employees will spend far less than a company with over 200 employees.
With all these factors in play, it’s difficult to advise a specific marketing budget calculation for all businesses. That being said, you may consider allocating 10% of your annual revenue and adjusting it according to the factors I’ve listed above.
What to do with my Marketing Budget
We are once again in a situation where one size doesn’t fit everyone. For example, Facebook Ads may do really well for a company that gives horseback riding lessons. However, if you’re an equine nutrition company and sell wholesale, that may not be the most recommended route. Additionally, let’s talk about channels. Channels are referencing the different pathways, either traditional or digital, that your company can take to advertise a product or service. For example, TV is a traditional channel, and social media is a digital channel. We can combine one channel’s marketing efforts with another channel’s efforts (tv commercial tied to social media) and create a campaign. Then, we have a much stronger chance and a better ROI than if you allocated your funds toward one media channel.
I think it’s important to mention that it would bode well for most companies to have a social media presence. Developing a social media management plan around your company will, at the very least, bring it into the 21st century and give it a voice among the community. However, this alone will usually not be enough to reach business goals. While the attribution of social media is needed, there are other digital efforts such as strategizing SEO, online ads and email campaigns that will work together to help you reach your goals more efficiently.
Would you like to start planning your marketing strategy? Contact Top Line Media Team today!